Financial Fitness

After nearly six months of employment following six months of unemployment, it’s time to get my finances back into shape. I’ve created a financial plan that I can follow on a consistent basis. I’m incredibly excited to have a plan again! It’ll be refreshing after a year of haphazardly doing whatever was necessary to cover my ass, only ensuring that my living expenses were paid for and that I stayed far away from consumer debt (student debt is dreadful enough). Regulated saving was an unaffordable luxury. For a chick who has read about the importance of saving and the possibilities of compound interest since she was 10 years old (thanks mom and dad!), this was difficult to cope with. My levels of cognitive dissonance rose as high as the penthouse suite of my condo building, leaving me stuck in self-doubt 35 levels below. I’ve always thought of myself as a saver, but I wasn’t saving. The gap between my self-image and my actions bothered me. My coping mechanism was avoidance: I stopped looking at my bank account balances. All of the zeros hurt my heart.

Now in a place of greater financial stability, it’s time to implement a plan. I’m ecstatic! I love financial planning. Few people seem to get the same thrill out of it that I do. Friends, if you don’t have personal financial plans in place, you don’t know what you’re missing! It’s fun to move money around on paper to test the possibilities of what you can do with your income. It’s a puzzle. You trade some financial priorities for others until you’ve formed a balanced plan that suits your needs and goals. Best of all, a financial plan is a huge stress reliever. It puts you in control of your money. Once created, it can be automated through online banking. Given that my plan was supposed to go into place when I received my last paycheque on July 5 and I haven’t made time to make the necessary transfers until today, I will absolutely be going the automated route to allow my money to take care of itself.

Now, as for the details of the plan, first and foremost it will account for my current living expenses, which include rent, hydro, internet, cell phone, groceries, gas, life insurance, and tenant’s insurance. I also have car insurance, but I paid off my annual premium between March and June, making me free of car insurance payments until I’m up for renewal in March 2014. Aside from my expenses, my plan addresses six other areas: my dream fund, retirement savings, student debt, spending money, vacation savings, and once-in-a-while expenses.

Dream Fund

The dream fund is back in action! As of my last biweekly paycheque, I’m depositing $250 per pay into a bank account that I’ve designated for long term travel savings. For the time being, I can afford to regularly save this amount because I don’t have any monthly insurance payments to worry about until next year. Europe, love, I’m on my way.

Retirement Savings

Also as of my most recent paycheque, I am putting a combined total of ten percent of my gross income into my TFSAs for retirement. By the time I had reached five months of unemployment in mid-December 2013, all of my non-registered bank accounts were empty. The only money left to grasp at was my pitifully small retirement fund, which I had started only a month and a half before I had quit my job last July. There was very little money in there, but it still killed me to withdraw it – all of it. That money was not to be touched until I was old and wrinkly. It was intended for Senior Maria; not the 23-year-old with a self-induced emergency. At the time, I promised myself that I’d put it back. Since then, I’ve decided to let it go and forgive myself. Instead of putting extreme pressure on myself to replenish my retirement fund to its former balance, I’m simply going to start over.

I need financial balance in my life. It’s important to me that my dream fund contributions are not delayed in attempt to revive a retirement fund that’s now gone. I’d rather relinquish financial pressure and begin anew. After all, to me, retirement means travelling anyway, so I don’t feel that my short term savings goal of Europe is in conflict with my retirement goals. I want to give myself opportunities to live my passion while I’m young and able to, as I also sensibly set aside money for the future.

Student Debt

My student debt currently drains me of $285 per month. I hate it. I feel like I’m throwing money into the garbage 12 times per year. That’s how little I value the degree that may take me a decade to outright own. I know how important it is to pay off debt as soon as possible or to at least pay more than the minimum required monthly payment. Believe me; I want my debt to be gone. It’s frustrating that I could give up my home and every cost associated with it, and I would still have an expense to worry about. I’d feel more comfortable if I could hypothetically be a homeless person without financial obligations. I’d like to know that, if my life ever comes to such a level of financial despair, that I could live under a bridge debt-free. (After half a year of unemployment, you’d start thinking about the logistics of your potential homelessness too.)

However, I’ve decided that, at this point in my life, my dream takes top financial priority, followed by my retirement savings. Debt repayment will be an action item for Future Maria to address when she feels the time has come. As for me, I’m used to my OSAP payments. I’m not sacrificing the kick-start of my retirement savings to immediately rid myself of payments that I’m already accustomed to. It’s bad enough that I’ve put off saving for retirement until age 23. Over comfort in my twenties, I definitely choose to have a shot at a comfortable retirement. Whose twenties aren’t a mess? At least my equally financially distraught peers and I are messes together. During my retirement, on the other hand, I’d like my life to be as financially tidy as possible. At this time, I will continue to pay only my minimum required payment of $285 per month to OSAP.

Spending Money

I will proceed with my current spending budget of $75 per paycheque. I used to dispute my need for allotted spending money by reasoning that $75 saved per paycheque can eventually add up to a vacation. As much as I love to travel, I no longer want to live solely for one or two weeks of the year. I prefer to invest in 52 weeks’ worth of consistent happiness instead.

Vacation Savings

Vacation savings are vital, considering my love of travel. Since graduating university in 2011, I’ve made it a priority to go on at least one vacation per year. As of my last paycheque, I am saving $25 per pay toward a vacation. This amount is pitiful, but I’d rather put more money toward my dream trip than this year’s vacation. I know I can make it work. I’m resourceful when it comes to travel and I now work in the travel industry, so I’m eligible to take advantage of certain perks.

Once-in-a-while Expenses

To avoid having to dip into my spending budget for irregular or unexpected costs (ex. gifts, car maintenance, a new straightener to replace a broken one, etc), I’m setting aside $25 per pay for once-in-a-while expenses.

In summary, my financial plan is designed to give me some freedom now and a chance at security in the future (fingers crossed for no recessions). It is meant to provide a realistic means for attaining my goals, and ensures that my monetary focus is on my priorities. It will be an essential tool in making my dream happen.